Argentine Farmers Search for Collective Action
A case study of rural cooperatives within the Genetically Modified agricultural production
in Argentina
Eivind Hanche-Olsen
Master Thesis, ILOS/HF UNIVERSITETET I OSLO
12.05.2013
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Argentine Farmers Search for Collective Action: Rural cooperatives coping with socioeconomic and environmental impacts within the Genetically
Modified agricultural production in Argentina.
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© Eivind Hanche-Olsen 2013
Argentine Farmers Search for Collective Action Eivind Hanche-Olsen
http://www.duo.uio.no/
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Abstract
The period after the introduction of GM technology in the Argentine agricultural sector has been characterized by soyaization, biotechnological hegemony, export-oriented populism or as a success story. All these topics are centred on the production of GM soybean. The first part of the thesis claims that the expansion and increasing production of GM soybean in Argentina has replaced other crops and agricultural activities and led to a production concentrated in larger farming units. Based on this perception the thesis focus on how local institution, such as rural cooperatives, can improve socioeconomic distribution and
management of natural resource within the actual agricultural reorganization. In this context collective action is presented as a central tool to solve social dilemmas connected to locating financial resources, markets, technical expertise, new production methods and diversification of agricultural activities. The thesis recognizes that the capacity of the farmers to engage in collective action on a local level is tied to political decisions on higher levels, and to
understand how the cooperative work within the broader political context agricultural policies on a government level is also analysed in the following work. The objective of the thesis is to emphasize the importance of local rural institutions in Argentina in the aftermath of the transition to GM soybean production, and promote a cooperative based model for future agro- state collaborations.
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Acknowledgments
Foremost I would like to send out a warm greeting to my informants in Flor de Oro, Lanteri and Avellaneda. You have been most helpful in supporting me in the collecting data process, but also shown a great hospitality. If this thesis fails I know I can always return and work as a gaucho with you Leo. I send a special big abrazo to Imelda for valuable kitchen table
discussions and for providing me with food and coffee.
I would also like to thank Osvaldo and Mabel in Buenos Aires for helping me with information, informants and keeping a critical mind to the overall research project in the initial phase of the fieldwork.
Moreover, my supervisors Kristi Anne Stølen and Benedicte Bull deserves huge appreciations for providing me with a network and exchanging information about Argentine politics and agricultural issues, and for constructive feedback and helping me with connecting the dots.
My aunt who has proofread the thesis also deserves many thanks; you have done a great job.
Last but not least I would like to thank princess Troch for patience, care and feedback through the whole writing process. You have definitely earned yourself a horse for the efforts.
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Abbreviation
AACREA - La Asociación Argentina de Consorcios Regionales de Experimentación Agrícola ACA - La Asociación de Cooperativas Argentinas
ADR - La Associación para Desarrollo Regional AFBF - The American Farm Bureau Federation CGE - Confederación General Económica CGT - La Confederación General del Trabajo
CONABIA - La Comisión Nacional Asesora de Biotecnología Agropecuaria CONICET – The National Scientific and Technical Research Council ConInAgro – La Confederación Intercooperativa Agropecuaria Limitada CPR – Common Pool Resource
CRA - Las Confederaciones Rurales Argentinas
ENGOV – Environmental Governance in Latin America and the Caribbean GEAC - The Cooperative Rural Extension Group
GM – Genetically Modified
GMO - Genetically Modified Organism FAA –La Federación Agraria Argentina
FAO - The Food and Agricultural Organization INASE - El Instituto Nacional de Semillas
INTA - El Instituto Nacional de Tecnología Agropecuria IPR - Intellectual Property Rights
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MNC - Multinational Companies
ONCCA - La Oficina Nacional de Control Comercial Agropecuario PJ – El Partido Justicialista
RR – Roundup Ready
SAGPyA - La Secretaría de Agricultura, Ganadería, Pesca y Alimentos de la Nación SRA – La Sociedad Rural Civil
SUM – The Center for Development and Environment UAA - La Unión Agrícola de Avellaneda
UBA – La Universidad de Buenos Aires UIA – La Unión Industrial Argentina
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Table of content
Title. ... III Abstract ... V Acknowledgments ... VII Abbreviation ... VIII Table of content ... X Figures: ... XIII
1 Locating rural cooperatives within the current agricultural boom ... 1
1.1 Research question ... 1
1.2 Previous studies ... 4
1.3 Why study GMOs in agricultural production? ... 5
1.4 Thesis structure ... 6
2 Historical background ... 8
2.1 The reorganization of the agricultural sector in the era of GM technology ... 8
2.2 Who are they? A conceptualization of agricultural producers in Argentina ... 12
2.3 Northern Santa Fe and the UAA ... 15
2.4 An historical approach to the state-agro relationship ... 18
3 Theoretical approach ... 23
3.1 Governing the common goods ... 24
3.2 Selective incentives for collective actions ... 27
3.2.1 The state and collective action ... 30
3.3 The state as an organizer of collective actions ... 31
4 The research process ... 36
4.1 Point of departure ... 36
4.2 Research design: Case study ... 37
4.2.1 Operationalization of central concepts ... 37
4.2.2 Connecting the research question with collective actions ... 39
4.2.3 Designing quality in case studies ... 39
4.3 Experiences and challenges ... 40
4.3.1 The interview guide ... 42
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4.3.2 Other sources ... 44
4.4 Strengths and limitations ... 44
5 Is the UAA an institution for collective action? ... 47
5.1 Selective incentives for collective action ... 47
5.2 Social incentives for collective action ... 50
5.2.1 Formal structures for collective action ... 50
5.2.2 Informal structures for collective action ... 52
5.2.3 Monitoring and sanction mechanisms ... 54
5.3 The Argentine state as an organizer of collective action ... 55
5.3.1 Export taxes ... 56
5.3.2 Export restrictions ... 57
5.3.3 Centralization of decision making ... 59
5.3.4 Return of old ideologies? ... 61
5.3.5 Privileged access or self-defence? ... 63
6 Socioeconomic distribution and natural resource management ... 65
6.1 Handling scale ... 65
6.1.1 Loans ... 66
6.1.2 Technical assistance ... 68
6.1.3 Partnership ... 69
6.1.4 New production activities ... 72
6.2 Agricultural diversification ... 73
6.3 Facilitating for a diversified resource use ... 75
6.3.1 Rotation and crop diversification techniques ... 75
6.3.2 No-till farming ... 78
6.3.3 Diversification of production activities ... 79
6.4 Resource governance ... 82
6.4.1 Common rather than individual management of natural resources ... 82
6.4.2 Local rather than governmental management of natural resources ... 84
6.4.3 Polycentric management of natural resources ... 87
7 Conclusions ... 89
7.1 Locating the findings within the broader discussion ... 92
7.2 Contributions and future research ... 93
Bibliography ... 94
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Appendix 1: Interviewees ... 98 Appendix 2: Interview guide ... 100
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Figures:
Figure 1: Cultivated area of soybean, cotton, sunflower and pastures – 2 Figure 2: The evolution of the GM crops of the total planted area – 9 Figure 3: Map over the Pampa and extra-pampeana region – 13 Figure 4: Map over UAA’s operational branches – 17
Figure 5: The distribution of benefits from GM soybeans – 20 Figure 6: Theoretical puzzle - 23
Figure 7: Model of the relationship between the Raffins and the UAA - 71 Figure 8: Agricultural products sold by the UAA (table) – 77
Figure 9: Agricultural products sold by the UAA from season 2005/2006 to season 2010/2011 (Chart) - 77
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1 Locating rural cooperatives within the current agricultural boom
The introduction of genetically modified (GM) technology in 1996 launched an increasing productivity of agricultural commodities and an expansion of the agricultural frontier in Argentina. The new GM soybean seeds, tolerant to glyphosate, in combination with no-till farming techniques played a leading role for this development (Trigo & Cap, 2003:89). In the crop season of 2010/2011 soybean accounted for 19 million out of a total 22.9 million
hectares planted with the GM technology (Trigo, 2011:7). Currently the GM soybean represents 95 per cent of the total soybean crop in Argentina (Teubal & Palmisano,
2009:198). The need for only one herbicide and the reduction of inputs such as labour and fuel lowered the expenses drastically for agricultural producers. In addition, a great
international demand for soybean or products derived from soybean, especially from China and Europa, results in favourable prices on the international market (Rodríguez, 2010:167).
Soybean products have for instance witnessed a threefold price increase compared to the 90’s (Trigo, 2011:18). This agricultural transformation has pushed forward a reorganization of the agricultural sector with a further emphasis on the production of commodities for the export market which has changed socioeconomic structures in Argentina. Within this agricultural reorganization, and the focus of this thesis, rural cooperatives play a central role for contributing to socioeconomic distribution and conserving natural resources.
1.1 Research question
After more than 15 years with GM soybean crops, important changes have occurred between Argentine agricultural producers managing the land. One of the main challenges facing small and medium sized producers within the agricultural transformation is related to the size of agricultural or arable land. The introduction of GM soybean crop has been followed by increasing export taxes on agricultural products under the governments of Néstor Kirchner (2003-2007) and later Cristina Fernández de Kirchner (2007-2011; 2011-). Favourable international prices on agricultural products have also raised the value of agricultural land in Argentina. These factors combined with increasing production costs lead to a scenario where
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many farmers need to scale up the size of agricultural land to maintain sustainable production units. The economies of scale mean that large farms are able to produce at lower costs. Small and medium sized farmers may lack the economic resources to make necessary investments to compete with these larger farming operations. This is leading to a concentration of production in larger farming units with smaller farmers getting squeezed out in the process of
reorganization (Rodríguez, 2010:248). The increasing emphasis on soybean production has also raised ecological questions for farmers since the soybean production extracts more nutrients from the soil and retransfers few compared to other crops (Solbrig & Adámoli, 2008:24). Hence, to avoid soil erosion, farmers must maintain rotation techniques which imply growing other crops to compensate for nutrient loss. However, profitability linked to soybean production may limit long practised rotation techniques (Pengue, 2005:317).
Moreover, promoting a more diversified agricultural production has other benefits, such as economic security for farmers and maintaining national food security. The actual ecological debt of the GM soybean production is a time dependent process, and it is hard to produce any grounded evidence of its consequences at this early stage (Barsky & Dávila, 2008:58).
Though, through observation, statistics and interviews I can claim that the transition to GM soybean has had and continues to have a negative impact on the diversity of crops and agricultural activities in Argentina (Pengue, 2005; Rodriguez, 2010). Studies done by Trig &
Cap (2006:29) reveal how the agricultural land of cotton, sunflower and pastures has been replaced by soybean production between the 1996/1997 and 2005/2006 season.
Figure 1: Cultivated area of soybean, cotton, sunflower and pastures
Source: Trigo & Cap (2006:27), based on data from SAGPyA
3 A final element of concern for farmers within this reorganization is related to government policies and actions. Policies based on high export taxes and export restrictions on agricultural products combined with lack of rural representation on government level impair the capacity of farmers to achieve profitable production units and conserve natural resources through their operations.
To meet environmental and socioeconomic problems linked to the GM soybean production and national policies, small and medium sized farmers are often dependent on rural
organizations which respond to their specific interests and needs. In this context rural cooperatives present an interesting case due to their economic function for members by providing inputs, technical assistance, commercialization, marketing, credits and insurance.
The importance of this economic function gets reinforced by the undermining effect of governmental policies and farmer’s institutional weakness at the state level. Rural
cooperatives also have a great social function and serve as a platform for communication, networking, cooperation and future organization. Through highly democratic structure members of rural cooperatives participate in sharing knowledge about markets, technology, inputs and the environment which can encourage them to follow a more sustainable local based resource use. Based on these perceptions the following thesis seeks to analyse:
How do rural cooperatives contribute to socioeconomic distribution and improve the management of natural resources within the agricultural reorganization oriented on the production of GM soybean?
In Argentina four organizations dominate the map of rural representation. La Sociedad Rural Civil (SRA) and las Confederaciones Rurales Argentinas (CRA) are known for representing medium and large farmers while la Federación Agraria Argentina (FAA) appeals to mainly small farmers and la Confederación Intercooperativa Agropecuaria Limitada (ConInAgro) is the organization for cooperatives. Considering numbers of members, extension of operational activities and organizational structure ConInAgro appears as one of the most influential agricultural associations in Argentina. ConInAgro represents 400 cooperatives and around 70 000 farmers in Argentina which are connected to nine federations. The organizational
structure is presented in three layers with the lobby organization at the national level, federations at the regional level and cooperatives at the local level. In this pyramid the cooperatives are directly connected to the farmers and therefore perform the most important functions for contributing to rural progress in local and regional agricultural zones
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(ConInAgro, 2011). Connected through ConInAgro, the cooperative la Unión Agrícola de Avellaneda (UAA), which operates in the northern part of Santa Fe, serves as an interesting case study for several reasons. The cooperative displays a strong organizational structure and plays a central economic role for farmers in the region. Moreover, despite the profitability of producing GM soybean and limited access to new arable land, lower soil quality and longer distance to transport hubs compared to other agricultural regions such as the Pampa, the cooperative manages to promote diversified agricultural activities. In this sense the rural cooperative can cope with socioeconomic challenges and ecological limitations in the agricultural production.
1.2 Previous studies
Several other studies concerning the reorganization of the agricultural sector have taken either an external or governmental stance to analyse the emergence, persistence or demise of social actors within the current agri-business. Newell (2009) claims that the inputs used in the new export oriented agricultural production, based on the technological package composed of no- till farming, GM seeds and agrochemicals, are largely controlled by multinational companies (MNC). This had led him to propose a hypothesis of bio-hegemony where MNCs exert material, institutional and discursive power over the agri-business in Argentina. Pengue (2005) and Teubal (2009) have a more complex focus, but also argue that large multinational bio-technological firms exercise great economic influence in the agricultural chain of
production. Richardson (2009:229-232) suggests that the inauguration of Néstor Kirchner representing el Partido Justicialista (PJ) in 2003 has been followed by an export-oriented populism. This new political orientation favours the urban population through taxation of the increasing production and export of agricultural commodities. In contrast to the old populism, which rejected the rural sector, the Kirchner governments are increasingly dependent on income from rural production to carry out their redistributive policies for purchasing urban mass support. Barsky & Dávila (2008) also focus on governmental policies towards the agricultural sector, but suggest that these have negative effects on current production, and are to blame for the polemic relationship between agricultural organizations and the government.
Other important contributions in the study of the GM soybean production focus on the
environmental consequences brought about by the transition to this production. This GM crop has been blamed for generating monocropping, deforestation and soil degradation
5 (Domínguez & Sabatino, 2010). According to Pengue (2005:314-316) the agricultural
expansion and exploitation associated with the GM soybean production in Argentina has led to nutrient depletion, soil-structure degradation, potential desertification, and loss of species.
Central studies done by Trigo & Cap (2003 & 2006) analyse the economic, social and environmental impact brought about by the introduction of new the GM technology in
Argentina. They claim that the introduction of this technology is a win-win case, in particular regarding GM soybean (Trigo & Cap, 2003:92). They base their arguments on the fact that the technological change has generated great economic incomes and employment through an increased productivity, agricultural expansion and new jobs linked to the technological sector.
Finally, the use of no-till farming, less fuel consuming machines and agrochemicals with lower toxic level in the agricultural production mitigate environmental impacts. On the contrary Rodríguez (2010:158-162) claims that research on technological changes in the Argentine agriculture done by institutions such as the Food and Agricultural Organization (FAO) and Trigo only emphasize positive aspects. These findings do not consider the outcomes for farmers taking part in the production and farmers which are excluded from the production. But more importantly these researches fail to analyse how the major substitution of other agricultural products under the transition to GM soybean production generates economic and social consequences for farmers. Technological change in the agricultural sector usually has a greater impact on substitution of production compared to other industries.
However a substitution of agricultural productions followed by an overall income increase from a more effective production does not automatically lead to an equal income distribution between farmers within the country and agricultural regions.
1.3 Why study GMOs in agricultural production?
There are several reasons to investigate the environmental and social impacts of Genetically Modified Organisms (GMO) in agricultural production. Primarily transgenes may produce unwanted effects by influencing the function of natural or managed ecosystems, and can damage the value of neighbouring non-GM crops. Seen from a social perspective, GM food can have negative health effects for humans. Furthermore, the bio-technology is not scale neutral and benefits mainly large seed and grain corporations and large farmers (Wainwright
& Mercer, 2011:414-416). However, Wainwright & Mercer (2011:418) claim that it is no longer a question of reversing the process but rather how to regulate the ecological effect of
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GM agriculture. What is my motivation for studying GMO’s in the agricultural production?
Based on my educational and interdisciplinary background from the faculty of humanities I take great interest in issues concerning social equality and environment. In this context the study of GM soybean, government policies and rural cooperatives gave me the chance to acquire deeper knowledge of how local institutions interact within the broader political context and how they might mitigate social and environmental consequences.
1.4 Thesis structure
The first task of the thesis is to highlight some central historical aspects concerning the reorganization of the agricultural sector into a greater emphasis on the GM soybean
production in Argentina, and give a better understanding of the social actors involved in the Argentine rural sector. Based on this information I will introduce the research area, northern Santa Fe, and contextualize the farmers and the cooperative within the rural sector of
Argentina. The chapter concludes with an historical presentation of the agro-state relationship with focus on the governments of Néstor Kirchner and Cristina Fernández de Kirchner and the emerging conflict between the rural sector and the latter president in 2008.
The theoretical chapter investigates how the concept of collective action influences the behaviour and capacity of farmers to solve social dilemmas in the rural sector. Collective action is analysed from different perspectives, and presents how this concept is organized between stakeholders in common-pool resources (CPR), by organization through selective incentives or by governments through privileged access or reformist policies.
In chapter four I address the way I conducted my research. The master thesis is constructed on the basis of a case study. In the research design section I operationalize the concepts of
collective action, CPR and socioeconomic distribution which are later used in the analysis.
The chapter also includes the experiences and challenges I encountered during my research process, and the strength and limitations with the overall research project.
The analysis is divided in two chapters. In the first chapter I analyse how the cooperative facilitates and supports collective action related to the variables discussed in the theoretical chapter. The last part of the chapter analyses how government actions influence collective action on local level, and how these political measures produce various outcomes for how farmers engage in collective action through the cooperative.
7 In the second chapter I analyse which tools the cooperative applies to cope with economic challenges related to the size of agricultural land. The following analysis also identifies agricultural diversification as a central tool to improve natural resource management and socioeconomic distribution, and analyses how the cooperative facilitates for members to engage in multiple agricultural activities. The last part of the thesis recaptures the theory and analyses the socioeconomic and environmental advantages of a local resource management compared to a state or private market options.
Chapter seven offers concluding remarks to the thesis and proposes future studies which may complement my research.
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2 Historical background
This chapter gives an historical introduction to the Argentine agricultural sector which is used as a backdrop in the later analysis, but readers have to bear in mind the complexity and
ongoing changes which exist between and within various agricultural regions in the country.
The first section explains the main features leading to the adaptation of the GM soybean and emphasizes some central characteristics of today’s agricultural sector related to the
introduction of the GM soybean crop. To reach a greater understanding about the farmers in question calls for an operationalization. This is done through presenting a traditional and a more up to date perspective on Argentine farmers. The third section gives an historical introduction to the fieldwork area, namely northern Santa Fe, and the investigated rural cooperative UAA. The information presented in this section will be linked to the agricultural context in Argentina related to the reorganization and the social actors involved in this process. In order to understand present agro-state dynamics, the last part presents some general characteristics about the agro-state relationship.
2.1 The reorganization of the agricultural sector in the era of GM technology
In the beginning of the 20th Century Argentina was a wealthy country due to great income from the export of agricultural products, and until 1940 agriculture represented the main engine of the Argentine economy. The country was a known world exporter of cereal, meat wool and leather, and considering its endless amounts of fertile land, Argentina was once known for being the “world’s breadbasket”. However, when the great depression hit the world economy in 1929, Argentina suffered severe economic losses. Economic recession and
droughts led to a lack of confidence in the agricultural sector as a source of economic growth, and Argentina initiated an internal industrialization process, also known as import substitution industrialization (ISI), from the 1940’s under the government of Juan Perón. A previous demographic shift from rural to urban areas in Argentina made the industrialization feasible, and since this period the political power has largely remained in the hands of urban voters (Reca & Parellada, 2001:708-709). A limited increase in the agricultural production until 1960 in Argentina is linked with a modest adaptation to new technology. However, from the
9 beginning of this decade and forward measures from el Instituto Nacional de Tecnología Agropecuria (INTA) contributed to slowly recapturing Argentina’s participation in world production of agricultural products (Reca & Parellada, 2001:712).
The introduction of soybean production in Argentina dates back to 1910, but a significant diffusion started first in the 70’s. Despite that the expansion of soybean production has gone through many stages, the two last periods from 1996-2001 and 2001 until the present have shown a tremendous growth in the production quantity (Rodríguez, 2010:165). Compared to the USA where a 90 percentage adoption took nearly 15 years this was completed during seven seasons in Argentina. The chart below, elaborated by Trigo y Cap (2006:11), illustrates the evolution of the GM crops of the total planted area, sorted by species.
Figure 2: The evolution of the GM crops of the total planted area
Source: Trigo & Cap, 2006:11, based on statistics from ArgenBio 2006
This fast transition to GM soybean is related to several factors. Primarily, reduced energy and labour costs as well as the decreased price of glyphosate, the pesticide used in combination with the GM soybean seeds, led to lower production costs in the soybean production. Trigo &
Cap (2006:23) emphasize that the low production costs, as a result of the technological changes, were the main force behind the increasing supply response among farmers between 1996 and 2001. Secondly, GM soybean has important synergy with no-till practices that facilitates the incorporation of double cropping and thus increased productivity on arable
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land. Furthermore, already established key institutions, such as el Instituto Nacional de Semillas (INASE) and la Comisión Nacional Asesora de Biotecnología Agropecuaria (CONABIA), which were created in 1991, facilitated and speeded up the evaluation and approval process of GM soybean. Finally, the absence of intellectual property rights (IPR) connected to the GM soybean and farmers rights to save and reproduce seed for future planting also lowered production costs and facilitated a rapid dispersal of the technology (Trigo & Cap, 2003:87-89). The fact that the company Monsanto which developed the GM soybean, also called Roundup Ready (RR), sold the patent rights to Nidera made the MNC unable to demand royalties or restrict the diffusion of the seed among Argentine farmers (Barsky & Dávila, 2008:43).
The main features of the rural reorganization involve land, labour intensive technology, social actors and capital. Land for GM soybean production was acquired through two processes;
changing agricultural activity on already managed land and/or acquiring new land. However, considering the rotation of crops technique, applied by the majority of agricultural producers, corn, wheat and sunflower also have an important position in the agricultural boom. However, GM soybean production is favoured for its profitability compared to other crops (Barsky &
Dávila, 2008:46). Buying, renting or sharecropping is the most usual methods by which farmers acquire new land. During the last decade renting land for production has become the most common method for farmers to get access to new land. The growing commitment to GM soybean production leads to a replacement and relocation of former agricultural activities such as cattle farming, previously located in the Pampa region, to the northern part of
Argentina (Teubal, 2009:76). In 2005 the GM soybean had replaced 4,600,00 hectares of land dedicated to other production systems such as dairy, fruit trees, horticulture, cattle and other types of grain (Pengue, 2005:315). Moreover, the relocation of former agricultural activities and the fact that GM soybean can be cultivated in semi-arid zones has opened the agricultural frontiers to new farmland development. Barsky (2012), who is a researcher at the National Scientific and Technical Research Council (CONICET) specialized in agricultural studies, claims that during the last years six to eight million hectares of new agricultural land have been incorporated into the agricultural production. This was also feasible due to the
convenient land management system involved in the production of GM crops. Machines used in this land management system are extremely expensive, and many agricultural producers employ contractors to do the needed labour, such as sowing, irrigation, fumigation and harvesting. The re-emergence of contractors of machines enables farmers and other
11 stakeholders to invest in agricultural land and organize the production cycle without living close to the production area (Rodríguez, 2010:173).
Scaling-up the size of agricultural land has further created a greater concentration of land managed by fewer hands. The deregulation and privatization of the agricultural sector in the 90’s under the government of Menem meant no governmental protection for small farmers.
Limited possibilities to adapt to the new technological reality and a growing competition from the exposure to the world market resulted in a mass migration from rural to urban areas.
Statistics show that 75 293 agricultural farms with less than 200 hectares disappeared from 1988 to 2002 (Teubal, 2009:77-78). However, Barsky (2012) mentions that many small farmers which were not able to increase the size of agricultural land are not necessarily forced from their land. As mentioned, leasing out land is an increasing tendency among small land owners. In this way small farmers can search for other economic activities while receiving a rental income. This rental agreement is usually arranged by paying a fixed rent annually, and in addition a certain percentage from the total production income or a predetermined price is paid. Trigo & Cap (2006:20) mention that the replacement of rural workers and pre-eminence of labour-saving technologies is not a peculiar case only encompassing Argentina, but a repeating trend in other major agricultural producing countries such as USA, Australia and Canada.
Finally, the economic profitability of growing GM crops for the world market, driven by reduced production costs and favourable international prices, has increased the value of land in Argentina dramatically. Small and medium sized farmers, have often have less financial capacity, and limited possibilities to purchase new land (Sili & Soumoulou, 2011:8). This argument can also be related to the enormous disappearance of farmers between 1988 and 2002. Furthermore, increasing profits from agricultural products have made it more attractive for non-agrarian business to invest in the production process. These new social actors can both be represented by businesses or individuals located in urban areas. Investment is usually placed within the organization of sowing pools. These are arrangements between the owners of land and investors where contractors are hired to do the work. The arrangements are often organized by mediators which have connections with wealthy businessmen in cities, land owners in the campo and machine-contracting firms. The arrangements can be time limited to one harvest or extend over several years. Profit from the production is distributed based on
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pre-negotiations and contracts between participants (Bisang, Guillermo, & Campi, 2008:166- 167).
2.2 Who are they? A conceptualization of agricultural producers in Argentina
Barsky & Dávila (2008:78) argue that the traditional image of the campo is a world divided between big land-owning ranchers and small producers, “chacareros” who rent land for agricultural production. According to them this is a very misleading understanding of a complex industry which consists of multiple actors intertwined with cities through links with markets, services and other businesses.
Teubal (2012), who is a researcher at CONICET and specializes in the Argentine agrarian economy, claims that a common way to divide the campo in Argentina is according to geographical location and size of farmland. First, he makes a distinction between the Pampa and extra-pampeana region. The first zone is located in the central east of Argentina, and has historically been the most productive area which mainly produced grains and meat for national and international markets. The extra-pampeana area encompasses the rest of Argentina where producers engaged in the production of industrial goods such as cotton, sunflower, fruits, sugar, rice, maté and livestock farming. These traditional images have changed with the major transition to GM soybean production. In la Pampa cattle farming has, as mentioned, been replaced by the production of GM soybean. Much of this cattle farming has been relocated to the northern part of Argentina (Teubal, 2009:76). The map below illustrates the geographical division of the Pampa and extra-pampeana region.
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Figure 3: Map over the Pampa and extra-pampeana region
Source: Elaborated by the author 2013, based on Stølen, 1996:XV
Within this geographical structure we can make a distinction between small, medium sized and large agricultural producers. Small producers are usually characterized as those who manage less than 200 hectares of land (Teubal & Palmisano, 2009:199). Large producers are according to studies done by Basualdo & Acreo (2005:76) defined as producers with more than 2500 hectares, and the medium sized ones, falls between these two categories. Many Argentine farmers manage large land areas compared to European farmers, but we have to keep in mind that Argentine farmers also pay high taxes on their agricultural products and receive limited financial or political support from the government. However, the
categorization of farmers above is not very accurate. The category of medium sized farmers is
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for instance misleading when one considers the huge disparity between a farm unit of 210 hectares and 2400 hectares. Moreover, farmers in the Pampa region have more fertile soil, a shorter distance to transportation hubs and better institutional frameworks compared to farmers in the northern part of Argentina, such as Chaco, Formosa and Santiago del Estero. A unidirectional focus on size of farm unit fails to capture the fact that the majority of farmers combine several agricultural activities, and the level of technology applied in these production processes determines how effective and profitable these activities are. Furthermore, this threefold division excludes other smaller agricultural groups, mainly located in the northern part of the country which encompasses family famers, indigenous communities and
subsistence farmers. These have more recently achieved some attention through social protest against the expansion of the agro-industry into their areas. Finally, external agents such as investors who participate in agricultural business through various mechanisms of production management such as sowing pools are also left out of this equation (Teubal, 2012).
Another important aspect is to understand that the profile of Argentine agricultural producers has gone through major changes the last twenty years largely due to new information
technology and increased know-how. Compared to the traditional farmers which possessed only a radio and lived next to the production area, the new agricultural producers are more business oriented. Television, internet and the cellular phones enable farmers to obtain knowledge about prices on agricultural products in the national and international market, technology, agricultural inputs and production techniques (Gras & Hernández, 2008:233). To adapt to a more business oriented production involving the use of high technology, many of today’s producers also have a university degree. Moreover, a simplification of the production processes has resulted in more urban farmers as they move to cities where access to public services, such as education and hospitals, are present (Barsky, 2012). In this context, many producers have gone from doing the actual labour to having a more supervising and
administrative role. This trend in combination with the concentration of agricultural production in larger farms has led to what Teubal (2009:78) characterizes as agriculture without farmers. The next section gives an historical introduction to the region in question and the cooperative investigated in the thesis. The presentation is related to the discussed topics concerning the agricultural reorganization and characterization of farmers in the two previous sections.
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2.3 Northern Santa Fe and the UAA
All my informants live in or nearby Avellaneda which is located in the northern part of Santa Fe. The south and central part of Santa Fe belongs to the Pampa region while the northern part is more ecologically similar to Chaco, a province characterized by bush land and more
climatic variations (Stølen, 1996:45; 71). New immigrant settlers established the first agricultural community in Avellaneda in 1879, and practiced subsistence farming where labour was the most critical factor of production (Stølen, 1996:48; 64). The economic crisis in1929 decreased the demand for Argentine export products dramatically, and farmers in northern Santa Fe, which had a low area productivity and low level of capitalization, suffered greatly under the following economic restructuring where farmers outside of the la Pampa region were encouraged to produce industrial crops such as cotton and oil seeds. During the industrialization process from 1936 an onward, when the Argentine textile industry witnessed a great expansion, cotton became an important crop in the region (Stølen, 1996:68-70).
According to Eduardo Raffin, farmer and member of the UAA, cotton is still an important crop in the region, but during the last decade many producers have been shifting to the cultivation of soybean.
Currently, through the presence of the UAA, partnership and diversification of production activities, some farmers have managed to scale up the size of agricultural land and increase profitability from production. Other farmers faced with large debt or unprofitable production units were forced to sell or lease out land. According to Luis Miguel (2012), farmer and member of the UAA, some producers did not manage to adapt to the new technological reality, but their loss became others gain. This also leads to a concentration of production where more and more farmers chose to lease out or sell land to other farmers and engage in other economic activities. Spontón (2012, who is the regional director of INTA in Santa Fe, mentions that these farmers usually handover the management of land to family, a neighbour or other person from the local community. The introduction of the GM soybean and a new method to organize the production cycle paved the way for social changes in Avellaneda and the remaining region. A combination of large families and the need for increasing size of agricultural land resulted in some family members applying for work in cities while some family members stayed behind. Some remaining farmers started to invest in land further away such as Chaco and Santiago del Estero. Some of my informants, for instance the Raffin brothers, rent agricultural land in Chaco for crop production.
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According to Stølen (2013), who is professor in social anthropology at the University of Oslo and has an ongoing project about gender and changes among Argentine farmers in the GM agricultural production, limited access to arable land in northern Santa Fe makes it more attractive to rent out land for raising cattle to small and medium sized agricultural producers.
Thus, external investors living in cities are more likely to invest in the mentioned activity and land than actual agricultural production in this region. There is less use of contractors of machines in the region as farmers who own machines usually also rent them out to other farmers. Characteristics of the agricultural producers in the region mainly fall within the groups of small and medium sized farmers where few farmers manage more than 500 hectares of land. The farmers in the region have become more dependent on the GM soybean crop as the importance of cotton production has decreased. However, corn, sunflower and other production activities, such as feedlots and poultry farming, also play a central position for farmer’s income (Avellaneda, 2011:31). The focus on diversity of agricultural production and other production activities in the region may be seen as a strategy to meet challenges related to the size of agricultural land. The investigated farmers in the northern part of Santa Fe reflect many of the characteristics of the new agricultural producers presented in the previous section. Observations from my fieldwork revealed farmers involved in multiple agricultural activities where knowledge, technology and network play a central role. The majority of farmers lived in cities, Avellaneda, Lanteri and Reconquista, close to the farming area, and many of my informants possessed a university degree. These observations can be related to Gras & Hernández’s (2008: 230-231) fieldwork from the Argentine provinces of Entre Ríos and Santa Fe in 2005-2006. In their research they identified a new social group of famers who have emerged in the aftermath of the transition to the GM soybean production. This is a group of farmers called “empresarios familiars” which have been able to consolidate the passage from a family farm to a successful business. The business strategy of this new agricultural producer include engaging in several economic activities such as investments in
infrastructure, renting land and hiring out services (Gras & Hernández, 2008:241-242).
According to Noguiera (1988:297-298) the cooperatives emerged as mechanisms of service suppliers between homogeneous producers and represented an alternative to the existing system of commercialization. The first cooperative union in Avellaneda was established in 1919 with the overall aim to have a joint commercialization of products and secure access to consumer goods. Today, as illustrated by the map below, the cooperative has extended their
17 activities to the whole northern part of Santa Fe as well as having extensive operations in the provinces of Salta, Formosa, Chaco, Corrientes and Santiago del Estero.
Figure 4: Map over UAA’s operational branches
Source: http://www.uaa.com.ar/institucional.php?id=4
UAA’s main goal is to support the agricultural activities of its members, add value to the production, generate new growth alternatives and translate these benefits to other agricultural regions. The cooperative offers a variety of services such as commercialization of products, internal pricing on inputs, technical assistance and a network connected to governmental institutions, suppliers and other rural organizations (Union Agrícola de Avellaneda). The northeast region of Santa Fe has been one of the poorest areas of the province considering profits and economy, but they compensate for this with strong organizational structures. One reason for this is the continuous close cooperation between the INTA and the UAA (Spontón, 2012).
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2.4 An historical approach to the state-agro relationship
Agricultural production holds a central position for the Argentine economy and trade since the middle of the 19 century, and the first rural organization, SRA, was already funded in 1866 (Heredia, 2003:81). However the relationship between stakeholders involved in agricultural activities and the state has often been polemic. Argentina is also a federal state, and regional authorities exercise considerable power over political decision-making and resource use within provincial boarders which can create conflicts of interest between national and regional governments.
The political tools used towards the rural organizations have varied over time, but have mainly been redistributive, distributive and regulating. Redistributive measures are policies based on price control and taxes to transfer assets between sectors where surpluses have historically often been extracted from the agricultural production. These measures have provoked the most intensive conflicts between the state and the rural organizations.
Distributive measures encompass the degree to which the state facilitates agricultural activities through investments in the sector, such as research, technology and infrastructure.
Regulating measures reflect policies which restrain farmers in their activities. These can take form as sanitary laws, size limitations on farm land or export restrictions to ensure internal food security (Noguiera, 1988:316-319). A current resurgence of conflicts between the state and agricultural organizations can be seen as a result reflecting all these three policies. The current government has implemented high export taxes on agricultural commodities,
measures to restrict free export of beef and wheat, and the distribution of economic resources done by the government to the rural sector is inconsistent compared to the urban sector (Barsky, 2012).
Historically speaking, urban primacy and the need to sustain a trade balance are two central dynamics for understanding governmental intervention in the Argentine rural sector.
Governmental initiatives to carry out structural and dynamic policies towards the agricultural sector have often been opposed by rural organizations (Noguiera, 1988:295). Since the great depression urban dwellers have represented the majority of the population and gained an increasingly dominant position in Argentine politics. With the first government of Perón in 1946 the urban sector and industrialization was seen as the primary motor for national
19 development. Neglect of rural development varied over time where some governments
promoted an agricultural export orientation while others favoured urban development.
However, from the government of Perón until the present, the political power has remained in the hands of urban voters (Noguiera, 1988:313). On the other hand, some governmental policies such as land reform and price control coincided with the demands of smaller rural organizations. FAA and ConInAgro wanted to see these policies implemented while other rural fractions that represented larger agricultural producers opt for non-state interference and free market policies (Manzetti, 1992:595-596). For instance, during the 40’s, interventional policy promoting access to land and the termination of forced eviction from land favoured the cooperative movement (Noguiera, 1988:298).
Agricultural production has always been a competitive source for the national economy in Argentina, and governments have often used this income source to finance other sectors and obtain governmental legitimacy. Perón used the income to boost the Argentine
industrialization, some military dictators appealed to social actors within the rural sector to achieve economic stability and political legitimacy, while the current government uses it to support social programs in urban areas while (Richardson, 2009:233-234). Moreover, since agricultural commodities represent the main export products of Argentina many governments have depended on the quantity of agricultural production to achieve trade balance. According to Richardson (2009:229), previously an increase in agro-exports of beef and wheat resulted in higher internal consumption prices hurting the purchasing power of urban dwellers while opposite policies to keep food prices low generated trade deficit. The introduction of GM soybean in 1996 changed this situation since the soybean is not a part of the Argentine diet, and the majority of soybean oil and soybean meal are exported without influencing internal food markets (Richardson, 2009:237).
After the economic crisis in 2001 the agro-industry was the only productive industry to survive the liberalization project of Menem. The government of Néstor Kirchner saw this industry as a way to recapture economic stability and secure trade balance. But over time his government and the later governments of Cristina Fernández de Kirchner increasingly used income taxes from agricultural commodities to finance their political programs leading to a scenario of governmental dependency on the soybean model. Trigo’s (2011:19) table, based on the distribution of benefits from GM soybeans, illustrates how the government revenues from export taxes of GM soybean have increased from 526 million US$ in 2003 to 3,311
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million US$ in 2011. These government revenues are a result of increased agricultural production and export taxes on soybean.
Figure 5: The distribution of benefits from GM soybeans
Source: Trigo, 2011:19
A scenario where the government seeks higher incomes from the rural sector without promoting rural development produces a more conflictive relationship between rural organizations and the government. Concentration of political power in urban areas and ongoing expenses to meet demands from urban dwellers impairs the progress of rural organizations. According to Yeyati & Novaro (2013:70-71) traditionally, the political representation of the rural sector has been weak, and the parties which represent rural voters are poorly organized. The lack of institutionalized representation of the agricultural sector at the national level and channels of communication between rural stakeholders and the
government are often origin to conflicts between the two parties. The governmental intent to implement resolution 125 served as a catalyst in the agro-state conflict in 2008. The 125
21 resolution involved linking exportation of agricultural products to a new system of mobile taxes. In other words, instead of operating with fixed export taxes on agricultural
commodities the new system would involve mobile taxes which adjusted according to international prices on agricultural products. The resolution emphasized an increase in the export taxes of soybean and a minor decrease in the export taxes of wheat and corn. However, Barsky (2012), researcher at CONICET specialized in agricultural studies, suggests that the proposed resolution was just one in the series of many undermining policies played out against the rural sector. The original draft of the resolution did not give much consideration to the size of farm units or variation in transport expenses. Major protest from the four largest rural organizations, SRA, CRA, FAA and ConInAgro, representing small, medium and large farmers forced the government to draw a second draft including the two mentioned
complaints. The resolution can be analysed from different perspectives. From a government stance the resolution was elaborated in compliance with increasing international prices on soybean products, a wish to expand governmental social programs and it represented a tool to mitigate the soybean boom. The export tax prices on wheat and corn were decreased to encourage producers to favour cultivation of these products. This governmental strategy, encompassing a rise in export taxes, has been applied several times before and after the economic crises in 2001. However, agricultural producers perceived this proposal as a direct attack on their interest and livelihoods for several reasons. Primarily, between 2007 and 2008 the export taxes were raised three times, and according to international price levels on
agricultural products the export tax on soybean would increase from 35 to 44 per cent and sunflower from 32 to 39 per cent under the new mobile tax system (Yeyati & Novaro, 2013:
71-73). Moreover, the tax level started so high that farmers could risk paying up to 50 per cent in export taxes on soybean if international prices reached 610 US$ per ton1 (Barsky &
Dávila, 2008:169). In addition, prices on inputs usually increase in accordance with international prices on agricultural products, and since the greatest production expense for farmers is technological inputs and not labour, small and medium farmers would suffer the biggest consequences of this resolution (Barsky & Dávila, 2008:176). Farmers from the four mentioned rural organization gathered to rally against the government of Fernández de Kirchner, and blocked important transport corridors to affect national and international demands for food, fuel and other supplies. Pressure from protesters and demonstrations nationwide forced the government to pass the legislation through congress where it was
1 International price on soybean is currently set to 547, 93 US$ per ton, accessed 11.05.2013
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rejected, and the old price-system based on fixed taxations was re-established (Giarracca, Teubal & Palmisano, 2009:271).
The following theoretical chapter identifies collective action as a key concept for the
emergence, maintenance and progress of cooperation between social actors in rural sector. In this context the cooperative is an important institution for facilitating and supporting the continuation of this cooperation faced with technological, economic and political changes.
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3 Theoretical approach
The theoretical chapter presents three theories which are later used as analytic tools in the main analysis. The first theory, based on Ostrom’s (1990) conception of common-pool resource, gives a local based approach to collective action and illustrates how formal and informal institutions can improve resource management. To place collective action within a bigger context Olson (1965; 1982) uses a model based on rational human behaviour to explain individual’s incentives for collective action, and describes how organizations work within societies and states. To capture the importance of external actors as organizers of collective action in Argentina, Schneider’s (2004) theory reveals how Latin-American states interact with national organizations. The theoretical puzzle is presented in the figure below.
Figure 6: Theoretical framework
Source: Elaborated by the author, 2013
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3.1 Governing the common goods
CPR theory is applied to demonstrate how rural cooperatives may present a valuable alternative for a more socioeconomic inclusive agricultural production with an improved management of natural resources. According to Ostrom (1994:2) common-pool resources are
“…natural or human-made facilities (or stocks) that generate flow of useable resource units over time”, such as forests or irrigation systems. Even though Argentine rural cooperatives do not exercise any direct control over natural resources they play a crucial role for the management of natural resources in their operational areas.
One central aspect in the CPR theory encompasses the concept of human behaviour. Ostrom (1999:3) criticizes economic perceptions which identify rational human beings only as self- centred and profit seeking individuals, and how this is applied as foundation for private or state led management of natural resources. Ostrom (2010:160) claims we need to recognize that “…rational choice theory is instead one model in a family of models useful for
conducting formal analysis of human decisions in highly structured settings”. Several laboratory studies of human behaviour demonstrate that a large proportion of individuals would chose to participate in common resource pools and also punish other individuals for not contributing. Moreover, fieldworks from various countries where CPR's are practiced support these findings, and illustrate how individuals organize to achieve trade benefits, mitigate from mutual risks and create and enforce rules to protect natural resources beyond the regulation of states or markets (Ostrom, 1998:7; 1997:18-20; 1999:1; 2007:3). This means we need a revision of the individual’s objectives towards managing of resources and to recognize that collective actions are results of incentives other than those of purely economic self-interest.
According to Ostrom (1997:7-8) conventional theories are incomplete since these are based on logic which excludes the importance of social interaction in solving social dilemmas.
Hence, understanding collective actions is more easily seen from the context within which individuals face social dilemmas (Ostrom, 2010:160). Cooperation between social actors does occur frequently, and in many instances leads to overall economic and environmental gains for the involved stakeholders. Cooperation and solutions to social dilemmas are largely based on informal structures such as trust, reputation and reciprocity (Ostrom, 2007:10). Ostrom (2010:163) suggests that reputation, trust and reciprocity, affect level of cooperation and joint benefits, and are likely to overcome short-termed material benefits that individuals involved
25 are attempted to pursue. Trust between stakeholders creates credible commitments which depend on the degree of reciprocity and reputation (Ostrom, 1994:20). Findings from Gras and Hernández’s (2008:237) research about social actors within the production model in the Argentine agriculture illustrate that trust between farmers creates social ties and provides a basis for the success of commercial transactions on a local level. Reciprocity reflects the willingness of individuals to contribute to the provision of public goods, and is correlated to their expectations of the behaviour of other stakeholders. Based on the reputation of other players, individuals estimate the risk of extending trust in a given situation (Ostrom, 2010:161). To achieve these goals appropriators of CPR’s take part in community
participation, face to face communication and common agendas for problem solving (Ostrom, 2007:8). Community is the arena where mutual commitment and trust are developed, norms are created and enforced and group identity is formed. Face to face communication is used to build up a group identity and commitment to follow up agreed on strategies (Ostrom, 2008:3).
Participation of members in elaborating rules concerning resources management is usually more preferable for meeting local conditions and needs than general market or state led regulations (Ostrom, 1994:6). Thus, we cannot predict when governmental ownership or the system of private ownership will perform appropriately.
The theory presents both a revision of actors engaged in management of natural resources and how they can organize a more sustainable management of these resources through their own operations. According to Ostrom's concept of collective action farmers will show high levels of interaction and cooperation to meet socioeconomic and environmental challenges. In an Argentine context, interaction and cooperation can take place through formal and informal structures facilitated by the rural cooperatives. Hence, rural cooperatives are central institutions for the solving of social dilemmas through participation, communication and common agendas. Furthermore, rural cooperatives in Argentina are self-organized
associations comprised of the farmers themselves. Therefore rural cooperatives have more knowledge about socioeconomic and environmental challenges in their region and possess the proper tools to cope with these challenges.
Another question linked to collective action is the behaviour of a member in a second order dilemma. These dilemmas arise when members of an already established CPR break set rules to increase their own benefits. Predicted problems of motivations for mutual monitoring activities and willingness to impose sanctions among members of a CPR can justify
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enforcement by an external actor, such as the state (Ostrom, 1990:44-45). The lack of motivation is explained by the fact that a participant is faced with the option of either changing the structures of the game or using costly sanctions towards rule breakers. In these situations many authors predict that collective action will fail as participants return to protecting their own interests. However, results from various experiments and field settings show that individuals participating in CPR’s to a large extent choose to monitor and punish other members to overcome such challenges. According to Ostrom (1998:8) “Most robust and long-lasting common-pool regimes involve clear mechanisms for monitoring rule
conformance and graduated sanctions for enforcing compliance”.
However, local resource management is not delinked from political and economic
circumstances on higher levels. This implies that we cannot analyse CPR's as independent resource systems. Agrawal (2003:251) adds the importance of including external forces and authorities to get a more nuanced understanding of the capacity of local institutions in resource management. He proposes a further emphasis in the relationship between national policy and local outcomes, market forces and demography. Schneider (2004:196) argues for instance that governmental policies in Argentina largely had a negative effect on association building. Hence, rural cooperative’s capacity to meet environmental and socioeconomic matters is highly connected to regional and national policies. To meet such a challenge the management of natural resources in Argentina can be based on a more polycentric governance system (Ostrom, 2007:4). Ostrom (2007:18-19) claims that “A polycentric system is one where citizens are able to organize not just one but multiple governing authorities at different scales”. In an Argentine context this implies that rural cooperatives achieve greater political influence at the regional and national level to promote their model for management of natural resources to mitigate negative consequences from the soybean boom. Agrawal (2003:246) also criticise the unilateral focus on case study method in the CPR approach which fail to
“…systematically test findings, compare postulated causal connections across contexts, or carefully specify the contextual and historical factors relevant to success”. Related to my research this critique emphasizes that there is big variation between rural cooperatives in Argentina and other countries in terms of institutional, economic, technological and
ecological capacity and level of knowledge. This may be seen as a future task for the study of CPR’s, and is also relevant for my thesis since I choose to use a case study method. The following theory gives a more general introduction to how organizations promote collective action and analyses how these interact with national policies.
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3.2 Selective incentives for collective actions
In Argentina farmers operate within a complex agro-industry, and have different objectives according to type, location and scale of production. Therefore agricultural producers seek to organize in associations which represent their specific interests. However, the majority of agricultural organizations have certain overarching goals targeting governmental policies.
According to Noguiera (1988:300) the tactical actions of rural organizations are explained by the need to preserve the legitimacy towards their members, the capacity for capital
accumulation and to keep competitiveness in operational markets. Considering the historical importance of agricultural activities in Argentina there is no doubt that agricultural
associations continue to play an influential part in Argentine politics and economics. Trigo (2012), who is an agricultural economist specialized in science, technology and innovation policy and organizational issues, suggest that the adoption of new GM technology has made Argentina more agriculturally oriented than even before the industrialization process in the 1940’s.
Olson’s theory on collective action can help us understand the behavioural pattern of farmers and strategies of agricultural associations. Some of the main arguments of Olson’s theory used in this section are derived from The Logic of Collective Action (1965), and the successor The Rise and Decline of Nations (1982). Olson uses the concept of selective incentives as an access point to his theory. He (1982:34) stated that “Those groups that have access to
selective incentives will be more likely to act collectively to obtain collective goods than those who do not…” Seen through an economic lens Olson wants to illustrate why rational and self-interested individuals choose to become part of a larger group or organization. First he states that the purpose of organizations is furtherance of the collective interests of their members. Labour unions will seek higher wages for the workers which they represent while agricultural organizations are expected to strive for favourable legislation for their members (Olson, 1965:5-7). However Olsen recognizes that individuals need some kind of selective incentives to act collectively and work toward the achievement of collective goods. Even though Olson (1982:41) recognized that small groups usually will have more lobbying and cartelistic power per capita he was more interested in understanding how larger groups like national unions or farmer organizations achieve and maintain influential positions in societies.
In societies or larger organizations all members are recipients of provided goods which
generate free riding because individuals don not recognize any individual benefits from acting
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collectively. Members of such organizations must be provided with some selective incentives to pursue collective goods. This could either be through coercion or by the inducement of a non-collective good for their members. Coercion is usually practiced by labour unions which demand compulsory activities such as strikes or union shop while non-collective goods are provided by the organization in terms of technical assistance, education, loans, insurance or other work related benefits (Olson, 1965: 68-72). In the USA the American Farm Bureau Federation (AFBF) maintained a relative size and stability due to the technical aid and education given to the farmers and through control of a vast variety of business institutions which provided their members with some special benefits (Olson, 1965:157). Olson's concept of rational human beings predicts no collective action without individual gains contributed by a parent organization. In contrast, Ostrom’s (1997:2) theory illustrates that individuals engage in collective actions to manage common resources without an external authority to offer inducement or impose sanctions. Olson (1965:63) makes one exception concerning his theory of large groups. When large groups are formed as federal groups, and further divided into small groups, such as rural cooperatives, social incentive may bring group-oriented action as well. In this context the federation, representing the large group as a whole, provides services to the small groups where the latter can use their social incentives to get members to
contribute towards the achievement of collective goals. Social incentives are the benefits granted by friends and associates for achieving collective goods. Associates of a social club can also exert social pressure to encourage individuals to do their part in achieving group goals. Thus social incentives can in many occasions outweigh economic incentives (Olson, 1965:60).
In The Rise and Decline of Nations (1982) Olson develops his theory further to explain how interest groups influence political and economic matters through interaction with the state.
For agricultural organizations changing national legislation became a main focus for achieving collective goods for their members. Effective and decisive action-taking towards government policies was made feasible through lobbying groups (Olson, 1965:53). Olson (1982:47) claimed that the lobbying efforts of these interest groups slowed down reallocation of resources and adoption of new technology since the organizations for collective action within societies are oriented towards struggling over distribution of income and wealth rather than creating production and additional output. This rent seeking behaviour leads to a
situation where interest groups aggregate income rather than create it. These arguments can both explain why agricultural producers choose to organize and how they can achieve